Published 7:00 pm, Thursday, April 30, 2009

NEW YORK (AP) - Oil prices finished the week with a late surge above $53 a barrel as traders looked past tepid economic reports and latched onto signs that U.S. manufacturing was on the mend.

Heavy industry is a major energy consumer and layoffs and factory shutdowns have resulted in huge stockpiles of unused natural gas and crude. As a result, crude prices have plunged to about half of what they fetched last summer, but they've edged up throughout this week.

Benchmark crude for June delivery rose $2.08 to settle at $53.20 a barrel Friday on the New York Mercantile Exchange. Prices climbed as high as $53.65 a barrel earlier in the day, the highest oil has been in a month.

In London, Brent prices increased $2.05 to settle at $52.85 a barrel on the ICE Futures exchange.

There was extremely light trading in Europe and Asia because of holidays there, and low volumes tend to create more volatile markets.

The private Institute for Supply Management's measure of the manufacturing sector's health showed slower contraction in April than the previous month. The Tempe, Ariz.-based group of purchasing executives based its report on indicators such as new orders, production, employment, inventories, prices, and export and import orders.

In March, orders to U.S. factories fell more than expected while factory shipments dropped for a record eighth consecutive month, the Commerce Department reported Friday.

There was also hope for Chrysler, which asked a bankruptcy judge Friday if it could start using a new infusion of $4.5 billion in loans from the Treasury Department.

People are driving billions fewer miles because of the recession, which has shaken the U.S. auto industry and diminished demand for fuel. Gasoline is much cheaper now than it was last year at this time.

The spread of the swine flu could further dampen demand for fuel with new concerns about traveling. Continental Airlines, the biggest U.S. carrier to Mexico, said on Friday it will cut in half the number of seats it flies to that country, where the flu has killed 12 people and sickened 300 more.

But so far "there's also a sense of relief that the swine flu isn't exploding," said Michael Lynch, president of Strategic Energy & Economic Research.

Analysts at JBC Energy said "concerns of a pandemic have so far only marginally affected oil prices."

For several weeks, oil prices have hovered around $50 a barrel even though government data show that the American appetite for petroleum has dwindled to its lowest point in a decade, and storage houses are holding the most unused crude in nearly 19 years.

Energy prices have largely stabilized, and many believe the market has hit the bottom.

At the same time, there is not a strong belief that energy prices will move sharply in either direction without some sort of economic jolt.

"You need to really draw down on oil inventories," said David Kirsch, an energy markets analyst at PFC Energy. "There's such a glut in oil and distilled products out there. You also need real signs of sustained economic recovery. We may not see that until 2010."

Meanwhile, slumping petroleum prices have discouraged new exploration and cut huge chunks out of oil company profits.

Chevron Corp. said Friday its net income in the first quarter plunged 64 percent from a year ago. Quarterly profit of $1.84 billion is its lowest since 2003.

Collectively, Chevron, Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC. earned about $13.3 billion in the first quarter, down 63 percent from the same quarter last year.

Also, Baker Hughes Inc. reported Friday that the number of rigs actively exploring for oil and natural gas in the U.S. is down nearly half from a year ago.

Gasoline futures rose Friday, bolstered by a report earlier in the week that Americans are filling up their cars at roughly the same rate as last year. Gasoline stores reported an unexpected draw in supplies ahead of Memorial Day, the unofficial start of the summer driving season.

Gasoline futures for June delivery rose 5.16 cents to settle at $1.5174 a gallon.

As the new month gets under way, traders will be looking for signs from OPEC about a possible production cut. The Organization of the Petroleum Exporting Countries, which next meets May 28, already has pledged to cut 4.2 million barrels a day. OPEC leaders have recently said the price of oil needs to be above $70 to fund high-cost production fields.

Experts say crude prices could finally jump out of the $50-a-barrel range if OPEC calls for new cuts, but Beutel said he thinks it's unlikely.

Gas prices inched higher for the third straight day this week, climbing overnight to a new national average of $2.054 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices have risen less than a penny per gallon from last month's average, but they're $1.566 a gallon cheaper than the same period last year.

In other Nymex trading, natural gas for June delivery was up 17.3 cents to settle at $3.546 per 1,000 cubic feet. Heating oil for June delivery rose 5.16 cents to settle at $1.3884 a gallon.